(Reuters) - While uncertainty can come from many sources, monetary policy decisions must always be forward looking, a Bank of Canada official said on Thursday, reiterating that the central bank expects higher interest rates will be needed to keep inflation near target.
Bank of Canada Deputy Governor Sylvain Leduc repeated some of the messages from the central bank’s interest rate decision on Wednesday, saying policymakers will take a gradual approach to rate adjustments and will be guided by incoming data.
In a speech to a group of economists in Quebec City, Leduc said in making its rate decision, the bank’s Governing Council weighed an economy that is growing largely as expected against elevated trade policy uncertainty that is restraining business investment.
Leduc noted that uncertainty is “everywhere and can come from many sources” and that consumers and businesses continue to make decisions regardless, as does the Bank of Canada.
“Monetary policy decisions are always made with an imperfect picture of the future and they must be forward looking, always with our mandate - the inflation target - in mind,” Leduc said in prepared remarks.
Still, the many uncertainties facing the Canadian economy make each policy decision, including the one on Wednesday “less straight forward” than the economic picture would suggest, Leduc said.
Reporting by Allison Lampert, writing by Leah Schnurr and Dale Smith